Until recently, Tesla remained the flagship of the electric car industry. But the situation is changing rapidly. The company is facing a drop in sales in the United States and Europe. Against this backdrop, Tesla’s dependence on China, its second most important market and key production center, is growing. However, Tesla is now losing influence in China as well, and Chinese electric vehicle manufacturers such as BYD have not only caught up but have begun to overtake the American company in terms of price and functionality.
According to Wall Street JournalTesla’s market share in China has been declining recently. In May, the company sold 40 thousand fewer cars in this country than in the same period last year. The drop in sales is a significant 30%. And this is not an isolated case, but part of a broader trend observed in different regions.
A few years ago, Tesla was a symbol of innovation, but now even the owners themselves call it «outdated». For example, Qiang Yang, a Chinese man, sold his Model 3 to buy a Xiaomi SU7 electric car, the new star of the local market. He compared Tesla to the iPhone, which was initially the market leader, but now may be losing out in many ways to other solutions with a lower price.
«They are becoming uninspired and outdated, and no longer have revolutionary functions», — he says.
While the American company delaying the renewal of the model rangeThe market is not waiting. Chinese electric vehicle manufacturers are constantly offering new models in different price segments. This encourages consumers to look for alternatives.
Elon Musk’s personal statements also play a role. His public support for extreme right-wing ideologies has significantly damaged the brand’s image in many countries. In China, the brand is losing not only the love of users but also the favor of the authorities.
«Tesla remains important for China, but supporting local companies is a priority», explained a consulting expert who works with Chinese government agencies.
Former General Motors vice president Michael Dunn believes that Tesla in China is already heading for the end of its era:
«You should never write off Musk and Tesla’s resilience, but the situation is not easy».
Additional tension is created by the fact that Tesla has not yet received full permission from the Chinese authorities to launch its Full Self-Driving driver assistance system. Nevertheless, the company has already begun to implement this system, which has caused dissatisfaction with official Beijing. At the same time, Chinese competitors have more time to reach a similar level.
Tesla has also canceled plans to create a new model focused on the tastes of Chinese consumers, instead deciding to save on current production. This is another strategic mistake amid growing competition.
And all this is happening at a time when Tesla’s management is going through a period of disorganization. Musk is once again plunging into politics, announcing its intention to create a new political party in the United States. This causes concern among investors and leads to a drop in the company’s capitalization by tens of billions of dollars.
According to experts, Musk played his cards wrong by not foreseeing that other players would be able to easily bypass Tesla in its second most important market. According to Bill Russo, head of the Chinese consulting company Automobility, Musk made the same mistake as many other Western automakers: «he underestimated China’s ability to out-innovate you».
Source: futurism
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